How To Manage Business Capital For Beginner Businessmen To Be Effective And Not Wasteful

Business asset illustration (Unsplash/Scott Graham)

YOGYAKARTA - One of the important skills that must be possessed by an entrepreneur is capital management. A businessman must know how to manage business capital to be effective and avoid bankruptcy.

The existence of capital in the form of money usually appears at the beginning of business development. Capital also determines how long the business can survive before finally reaping success. Then how to manage capital well?

How to Manage Business Capital

It should be noted, the amount of capital does not always bring success in business. However, well-managed capital can lead a businessman to success. Before you spend capital for business purposes, consider the following tips.

1. Create a priority scale

When building a business, entrepreneurs must be able to make a priority scale. This scale will help entrepreneurs to select what is really needed when building a business and what needs are not too urgent.

For example, you plan to open a coffee shop. The most important things from this business are coffee, glasses, sugar, or tools that support you in making coffee. These items should come first. Meanwhile, other items such as shop decorations can be put aside first.

2. Financial Records

Keeping financial records is very important so that you know the incoming and outgoing capital in the business. Financial records are also important as material for evaluation in the following month when the business is running. You have to know where your capital flows. Business financial records must also be done as detailed as possible.

3. Not Mixing Capital with Personal Finance

This mistake is often made by novice entrepreneurs. Mixing business capital with personal money is a fatal mistake. The reason is that capital can run out for things that are consumptive. Try to separate capital accounts and personal accounts. Capital accounts are only used for business purposes, while personal accounts are used for personal purposes.

4. Allocate Part of Capital to Cash

Capital must also be divided into several parts, including allocating some capital into cash. Having cash is essential in case of urgent and unplanned business needs. Cash allocation can be 20 or 30 percent of capital. Cash also may not be taken for personal gain.

5. Make purchases of quality goods

You are advised to buy production goods of good quality. This step is considered to be one of the ways to keep capital from swelling because the means of production suddenly break down when the capital has not returned. However, you are also not advised to buy excessive-quality production goods. Try to stick with adjusting your capital and business scale. For example, a coffee shop does not need an expensive 5-star hotel automatic coffee maker.

6. Choose Employees Who Master Their Fields

When procuring employees, employers should not choose people arbitrarily. Choose workers who are knowledgeable in your field of business. A worker who doesn't have skills in his field will make your business stuck and tend not to change. In addition, employees who do not master the field will only burden the company's finances.

7. Do not spend wasteful perishables

When starting a business in the culinary field, food ingredients are certainly a must-have capital. However, entrepreneurs are not advised to buy excessively perishable materials. You can buy groceries in a quantity that increases regularly. For example, in the first month of buying 5 kg of rice. Rice purchases can be increased to 10 kg in the 4th or 5th month.

That is information regarding how to manage business capital. To get other interesting information, visit VOI.ID.